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Memo to Microsoft: Allow a Cleaner Hosted Desktop

An important licensing battle between Microsoft and gaming company OnLive over an app that gives users remote access to a Windows 7 desktop exposes a fault line running through Microsoft's products, business models and its hosting partners.

Earlier this year, cloud gaming company OnLive released an Apple iPad app called OnLive Desktop that allowed remote display of a limited-functionality version of Windows 7 running in the Palo Alto, Calif.-based company's datacenter.

The version of Windows 7 served up by the datacenter-app combo included a keyboard button in the taskbar, fully functional versions of Word, Excel and PowerPoint, and a 1Gbps Internet connection.

What was refreshing about using the OnLive Desktop was that it provided a Microsoft experience in a straightforward way -- no convoluted licensing agreement with Microsoft, no setting anything up with the IT department. It was just click, pay and start. That's what users are coming to expect from technology, but it's now clear that it wasn't Microsoft's intention to have its software used that way.

A freebie released in January got a lot of reviews, but a late February update with pay options of $5 and $10 a month seemed to get Microsoft's attention. In mid-March, Joe Matz, Microsoft corporate vice president of worldwide pricing and licensing, suggested very strongly in a blog entry that OnLive is off the reservation.

"We are actively engaged with OnLive with the hope of bringing them into a properly licensed scenario, and we are committed to seeing this issue is resolved," Matz wrote.

Much of Matz's post was dedicated to spelling out how Windows can only be provided by hosting partners either through a virtual desktop infrastructure (VDI) scheme that involves customers already having licenses, or by having limited desktop functionality served through Windows Server and the Remote Desktop Protocol. The Service Provider License Agreement "does not support delivery of Windows 7 as a hosted client," Matz wrote.

Simon Bramfitt, who's been providing analysis of the OnLive-Microsoft licensing situation on his blog, speculates that OnLive might have been trying to create this fight all along, and that the party in trouble could be Microsoft -- not because it will lose to OnLive, but because Redmond is losing the argument in the market.

"You have to acknowledge that it is long past time for Microsoft to address the shortcomings within its current licensing policy with regard to VDI," Bramfitt commented on Matz's post.

It's a safe bet that Matz's broadside was partly prompted by angry calls from Microsoft's committed hosting partners, who have struggled to play by Microsoft's confusing rules that undoubtedly put off potential customers.

In fact, the content of those partner calls might be different than you'd expect. "I'm very thankful for the situation," says Danny Allen, CTO of Desktone, which offers desktops as a service under Microsoft's licensing rules. "It's raised visibility to the challenges of Microsoft licensing, which has not kept up with the demand that there is for cloud-hosted virtual desktops."

Microsoft badly needs to unshackle its hosting provider partners. Consumerization and mobility are changing the technology world, and if Microsoft doesn't recognize it and act fast enough, it's not just Redmond that will suffer. Committed, rule-abiding partners will lose too.

Can Microsoft afford not to bring virtual desktop licensing in line with market trends? Let me know in the comments below or at sbekker@rcpmag.com.